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 Post subject: interesting bill proposed
PostPosted: Fri Aug 24, 2007 10:33 am 

Joined: Thu Apr 19, 2007 7:58 am
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In my metro area paper, they are reporting about a bill to be introduced by Rep. John D. Dingell, that would "remove mortgage interest deuctions for McMansions- homes over 3,000 square feet"

The stated goal seems honorable enough i.e encourage people to live in smaller homes thereby theoretically reducing carbon emissions. But his approach is misguided at best. Just because your home is large doesn't mean that you are necessarily using more energy. My home is larger than some friends but their energy bill is higher.

Something I found interesting was the use of the term McMansion. The article estimated that only 15% of owner occupied homes have 3,000 square feet of interior space. That surprised me. It is not uncommon at all in my area to have a home that size. While size plays a factor in what I consider a McMansion, usally I asociate the term with a particular style of home in a specific type of neighborhood.

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PostPosted: Fri Aug 24, 2007 11:30 am 
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I associate it with nouveau riche. But then we don't have them over here quite so much, new houses are almost invariably smaller than old ones.

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PostPosted: Fri Aug 24, 2007 1:04 pm 

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In my community, the average house has less than 2000 square feet and sells for around $1M. Most people rent out their basements, so they are really in 1000 square feet. So, yeah, I can see why someone would tax McMansions.

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PostPosted: Fri Aug 24, 2007 1:59 pm 
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Wow, that's fascinating. It seems like square footage wouldn't be enough.

You would need a more complicated formula to qualify a house as a "McMansion." Something like taking the weighted average of square feet and the assessed value, then dividing by the number of people living in the house, and including a fudge-factor that will add points for having "luxury items" like a swimming pool, pool house, private security gate, live-in help quarters or some such arbitrary factors.

I was just thinking about here in SoCal where there are lots of out of control McMansions. They are usually concentrated in certain neighborhoods, invariably have private gates and drives, and probably only house a couple of people.

Of course, in our neighborhood, if you are a first time home buyer (or without an obscene down payment), you can't even get a house on a conforming mortgage -- Jumbo mortgages are the norm, even for condos. And we are essentially paying extra for this through higher interest rates. I read somewhere this week that Jumbo mortgages are only 15% of the overall US housing market (even though it's the norm here), so maybe if >3000 ft^2 is only 15% of the market, then it's an easy (although arbitrary) way of imposing the tax.


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PostPosted: Fri Aug 24, 2007 2:55 pm 

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It doesn't seem fair to add to the cost of jumbo ($450k+) or super jumbo ($650k+) mortgages. In many cities, including those in SoCal, you simply cannot buy a condo at those prices, if you're new to the market.

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PostPosted: Fri Aug 24, 2007 3:20 pm 
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The definition of McMansion is pretty obvious here in Houston. The city has NO zoning ordinances and absolutely refuses to do anything remote perceived as limiting business and/or civil liberties. So-called "developers" add "master-planned communities" at the rate of 1-2 per year. These communities have 500-1000 single family homes, offered in your choice of 3 styles. The neighborhoods are created by bulldozing ALL the vegetation and wildlife, then sticking a couple of pine-tree twigs in the ground. The nicer communities have a pond with artificially blue-green water which, like the ground, isn't capable of supporting life.

So it's not about price or square-footage, it's about a box that looks exactly like the box 2 doors down, sitting on a plot of dirt that doesn't yet have grass, in the shade of a 10' pine twig.

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PostPosted: Mon Aug 27, 2007 6:49 am 
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consultantjournal wrote:
In my community, the average house has less than 2000 square feet and sells for around $1M. Most people rent out their basements, so they are really in 1000 square feet. So, yeah, I can see why someone would tax McMansions.

Exactly what our area is like!

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PostPosted: Mon Aug 27, 2007 8:12 am 
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I think it would be more sensible to only allow the deduction on a single home. I'm sure that there are some large families that a 3000 foot home is just living space. While for others, they may have a 2500 vacation home that's also a tax deduction for them. This seems like it's simply a way to punish people for having more.

If it's actually about the environment, then it seems like you'd need to take landscaping and things like garages into account (I don't believe garage space is counted in square footage.) A drafty 1000 sq foot home with a 20 year old furnace is going to do a lot more environmental damage than a 3000 sq foot home that's well insulated, well maintained and has a heat pump.

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PostPosted: Mon Aug 27, 2007 10:15 am 
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That's an incredibly short-sighted bill. If they want to increase taxes on something to energy consumption, then they should increase taxes energy. Doing anything else won't translate directly into the desired effects. And it won't change the fact that a lot of people already live in large, inefficient houses. Encouraging people to reduce actual energy consumption is applicable even to those that already own a McMansion. And how is it that a couple of DINKs living in 2900 sq. ft. is more responsible than a family of six living in 3100 sq. ft.?

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PostPosted: Mon Aug 27, 2007 10:35 am 
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If they're going to do it it shouldn't be just by square footage but rather by sf/person. Come up with a reasonable number of sf to allow per person and anything over that you get taxed on. That way the family of 7 that lives in a 3500 sf house won't get screwed but the single guy in the 2900 sf house will have to pay up. It would be virtually impossible to do this though and would hurt the parents of kids who are moving out so instead of that i think they should either tax usage more or come up with more incentive to use energy efficient items.

I'm personally a fan of raising the price/taxing the hell out of the things that cause the most damage. I'd love to see cigarettes at $15/pack and gas at $15/gallon. It would deter a lot of users of both and we could use the extra revenue to pay for some of the services that are underfunded instead of robbing from our country's financial future.


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PostPosted: Mon Aug 27, 2007 12:22 pm 
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As much as I'm in favor of dettering driving for most people, very high gas prices will punish the poor more than the drivers. The higher gas prices result, first, in higher food prices. Also, the people who live in poor areas are usualy the ones with the least public transit access. Without a real transit infrastructure, raising gas taxes is more punishment than deterrant. If the idea is to make less fuel efficient vehicles less enconomical, then put the taxes on the purchase, and base the taxes on MPG. (Of course then they'd have to do real fuel testing rather than the bogus numbers the EPA Estimates provide). For every MPG in city driving it gets under 30, add $1000, for every MPG under 20, add $5k. Funnel that tax money into transit and see what happens.

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PostPosted: Mon Aug 27, 2007 12:41 pm 
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morydd wrote:
As much as I'm in favor of dettering driving for most people, very high gas prices will punish the poor more than the drivers. The higher gas prices result, first, in higher food prices. Also, the people who live in poor areas are usualy the ones with the least public transit access. Without a real transit infrastructure, raising gas taxes is more punishment than deterrant. If the idea is to make less fuel efficient vehicles less enconomical, then put the taxes on the purchase, and base the taxes on MPG. (Of course then they'd have to do real fuel testing rather than the bogus numbers the EPA Estimates provide). For every MPG in city driving it gets under 30, add $1000, for every MPG under 20, add $5k. Funnel that tax money into transit and see what happens.


Yes, this is an issue, but it would be pretty easy to get waivers for businesses and farmers who are using their vehicles to transport goods so it wouldn't really impact food or other material prices. It could also be possible to have a needs based system like food stamps or something where if you make under $x then you get a discount. Or you could just apply it in major metro areas which is where most of the wealth is concentrated.

Alternatively, the fed govt could give tax incentives to towns/cities that improve their PT systems and allow credits for people who use those systems.

Taxing the cars is a good idea but it wouldn't do anything for the hundreds of thousands of gas guzzlers that are already out there.


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